A Sporting Chance

A Sporting Chance

Economic doom and gloom has sent many IT departments to the sidelines over the past few years, but as IDC's latest Forecast for Management study shows, CIOs are finally getting back into the game.

It was Mark Twain who was quoted as saying that reports of his death were greatly exaggerated. His line seems apt when looking at the Information and Communication Technology (ICT) industry over the past 20 or so months.

Back in early 2002 the evidence was of a significant decline in IT spending. Budgets were being cut, contractors were being let go and there was an obsessive operational focus on the delivery of IT services. Doom and gloom seemed everywhere. Yet despite the continuing slide in share markets around the world, IDC's latest Forecast for Management survey reveals that things have been slowly and steadily picking up for those in the computer industry.

The first evidence that things are better than last year is shown in response to the question asking CIOs how they believe their executive views IT. The England soccer coach, Sven Goran Eriksson, once famously remarked: "Football is much harder if you don't have the ball." Similarly, being a CIO is much more difficult if you do not have the support of the business. So it is heartening to note that there was a noticeable increase (28 per cent), albeit off a record low base, in the numbers of IS executives reporting that they believed their executive saw IT as a source of competitive advantage (Graph A). This is now at the highest level since 1999.

There was similar good news regarding IT spending patterns. The study asks respondents to identify IT expenditure both as a percentage of turnover as well as a percentage of operating expenses (Graph B). It also tracks IT investment happening outside the CIO budget. After the savage pruning of the IT budgets evidenced in the 2002 survey things were more or less stable this year. However, the responses revealed that it was not the large organisations who were fuelling this IT investment. Instead, medium-sized organisations (that is, those with between 250 and a 1000 staff) reported a noticeable increase in the proportion of their turnover that they were allocating to ICT.

But there are no deep pockets for CIOs when it comes to new projects. A question was added this year that asked respondents to identify the percentage of their ICT budget not already committed and allowing for discretionary expenditure. George Best, the mercurial British soccer genius of the 1960s, once commented: "I've spent most of my money on birds, booze and fast cars. The rest I just squandered. Clearly local CIOs do not have quite the same freedom. Just over 94 per cent of respondents to Forecast for Management revealed they had no allowance for discretionary expenditure (Graph C).

Another trend that emerged from this year's survey was increasing tendency for IS executives to lease their acquisitions rather than to purchase them outright (Graph F). In 1997 only 17 per cent of respondents reported that leasing was their favoured method of obtaining new equipment. Today that figure stands at more than 27 per cent. This probably reflects the challenge of securing funds for capital investments whereas leasing means that products are acquired via operating expenditure where their price tag is less conspicuous.

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